BIOTECHNOLOGY

New Technologies for Health

INVESTMENT CASE

BIOTECHNOLOGY

After a very tough 2016 marked notably by political rhetoric on drug pricing and a very low level of drug approvals by the FDA, and a sharp recovery that followed in 2017, we believe the current rerating of the Biotechnology sector is likely to gain steam as we move into 2018. We see M&A as a very powerful catalyst to support sector's undemanding valuations

On the therapeutic front, we believe that genes therapies and personalized medicine will be on investors’ agenda as we move into 2018 as newer technologies (including mobile wearables) are now able to capture, analyze, and share clinical data in a very short timeframe. With the new US tax-code and the huge incentive it has on investments (expense of amortizations), Capex is likely to get a boost and is likely to benefit the "hardware" players

We also believe that personalized medicine is not far away from becoming ubiquitous as prices for new testing (including DNA analysis) and analysis are coming down sharply

Against this backdrop, we favor Biotech companies exposed to gene therapies, antibodies and rare diseases over the larger market cap names which benefited more from rising drug prices than from volume growth

BIOTECHNOLOGY
NEW TECHNOLOGIES FOR HEALTH

Modern biotechnology involves the use of live organisms or their products (bacteria or enzymes) to manufacture drugs

Biotechnology products have wider applications
than classic pharma
​

A completely different business model than pharma

Today lines are blurred between pure biotech and pharmaceutical companies as these industries are partially consolidating

Solution to a global social issue - The Hope Offering

WHAT IS HAPPENING NOW?

UPCOMING CATALYSTS

2017 IS EXPECTED TO BE A RECORD YEAR FOR FDA APPROVALS

Food and Drug Administration - the first level of decision-making before commercialization:

Consistent legal and political framework across states

FDA has the most demanding approval standards in the world

The FDA does not make decision on drug reimbursement:

Insurance companies have the right to take this decision individually

Biotech companies start reimbursement discussions at the earliest stages of research

A record year for FDA approvals in 2015, followed by an unprecedented low number in 2016 as fewer applications were submitted and complete response letters (CRLs) were sent due to manufacturing practice deficiencies (GMP), again followed by a new record year in 2017 as:

Many important drugs in the last stages of development were (and are still) waiting for an approval

The 21st Century Cure Bill gets new drugs and devices approved faster

A streamlined FDA → Accelerate the approval process for new drugs (including generics)

PERCENTAGE OF PEOPLE BY TYPE OF
HEALTH INSURANCE COVERAGE IN US

Source: Census Bureau's March 2014, March 2015, and March 2016Current Population Survey (CPS: Annual Social and Economic Supplements)

NUMBER OF DRUGS APPROVED BY FDA

Source: AtonRâ Partners, FDA

PERSONALIZED MEDICINE:
THE FUTURE OF MEDICINE?

Treatments targeted to the needs of individual patients

Technological breakthroughs and computer power are accelerating the field

Strong government support

CHANGING NUTRITION HABITS:

WHAT ARE THE OUTCOMES?

Obesity is one of the biggest health concerns. Obesity levels are rising. Across the United States, more than one in three adults and one in six children are obese (13% of worldwide obese population comes from the U.S.)

The two countries showing the highest growth in obesity level are China and India (15% of the worldwide obese population) leading to:
​

Cardiovascular diseases

Diabetes

Musculoskeletal disorders

Cancers

EMERGING MARKETS:
A REAL OPPORTUNITY FOR BIOTECH

Huge populations

Increasing prosperity and standards of living(growing middle class)

Aging population

Emerging markets will lead the diabetics industry growth. Global executives are expecting 30% of their biopharmaceutical sales to come from emerging markets by 2018

2017 IS EXPECTED TO BE

A VERY STRONG YEAR IN M&A

PERSPECTIVES

GLOBAL PERSPECTIVES IN THE LONG-RUN

Global biotechnology market expected
to grow by 8% CAGR through 2020

Source: MarketLine Industry Profile

Top 10 therapeutics areas by 2022MARKET SHARE & SALES GROWTH

Source: EvaluatePharma 2016

THERAPEUTIC AREAS

GLOBAL MORTALITY CASES IN 2015

(by number of cases)

Source: AtonRâ Partners, The Lancet

NEW CHALLENGES FOR A NEW WORLD

Oncology cases have increased by 17% worldwide during the last 10 years due to aging population (probability increases with age)

Neurological Diseases are affecting more and more people (+35.2% growth from 2005) due to: aging population, obesity, smoking and genetic predisposition

Infection cases have decreased by 10% during the last 10 years led primarily by decreases in HIV/AIDS and tuberculosis cases